Fiscal Crisis and Expenditure Cuts

Abstract

The Great Recession resulted in fiscal crises for governments across the Western world. Significant cuts in government programs and in public administration itself were initiated as many governments scrambled to reduce their growing budget deficits. We are interested in how European governments have reacted during the most recent crisis. In particular, our article explores whether rationally oriented management approaches are associated with targeted and efficiency cuts rather than across-the-board cuts. The theoretical part of the article outlines the predictions about how the use of rational approaches will affect the types of cuts used by public agencies. In the empirical part of the article, we use the survey of 7,077 senior government officials in 19 European countries, undertaken within the framework of the Coordinating for Cohesion in the Public Sector of the Future (COCOPS) project. We find that several rationally oriented approaches—use of strategic planning, focusing on outcomes and results, rewarding goal achievement, and increased relevance and use of performance measures—are positively associated with the use of targeted and efficiency cuts. These findings suggest that rational management techniques adopted by governments over recent decades might be used by managers to help them make strategic decisions, even during times of crisis.

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